Smartphone market continues to plunge, with Samsung worst hit

Samsung’s smartphone shipments have declined for the past four quarters and the overall market has followed.

At the same time Huawei continues to go from strength to strength. Annual smartphone shipment growth of 41% allowed Huawei to take second place in the global rankings last quarter and 32% growth this quarter was enough to keep Apple at bay once more. Samsung’s shipments declined by 13% this quarter and if these trends keep up Huawei could grab the top spot before long – a previously unthinkable event.

“Global smartphone shipments tumbled 8 percent annually from 393.1 million units in Q3 2017 to 360.0 million in Q3 2018,” said Linda Sui of analyst firm Strategy Analytics. “The global smartphone market has now declined for four consecutive quarters and is effectively in a recession. The smartphone industry is struggling to come to terms with heavily diminished carrier subsidies, longer replacement rates, inventory buildup in several regions, and a lack of exciting hardware design innovation.”

“Samsung is losing ground to Huawei, Xiaomi and other Chinese rivals in the huge China and India markets,” said Neil Mawston of SA. “Samsung must solve its China and India problems before it is too late. Huawei remains the world’s second largest smartphone vendor with 14 percent share. Huawei has little presence in the valuable North America market, but its Android models are wildly popular in most of the rest of the world, particularly Asia and Europe.”

One interesting twist to the numbers was Apple’s decision to stop reporting shipment numbers from next quarter onwards. Since this is always its strongest quarter you have to wonder what Apple is playing at. “Starting with the December quarter, we will no longer be providing unit sales data for iPhone, iPad and Mac,” said Apple CFO Luca Maestri on the earnings call. “As we have stated many times, our objective is to make great products and services that enrich people’s lives, and to provide an unparalleled customer experience so that our users are highly satisfied, loyal and engaged.

“As we accomplish these objectives, strong financial results follow. As demonstrated by our financial performance in recent years, the number of units sold in any 90-day period is not necessarily representative of the underlying strength of our business. Furthermore, a unit of sale is less relevant for us today than it was in the past, given the breadth of our portfolio and the wider sales price dispersion within any given product line.”

Fair enough but the market will be the judge of how relevant Apple’s unit shipment numbers are. Companies like Strategy Analytics will still publish estimates and journalists will still write about them. Apple was one of the few smartphone vendors that still published its numbers so maybe it has decided, as has LG, to get in line with its competitors on this, with the overall declines in the smartphone market possibly contributing to that decision. But the weak reasoning offered above will leave many unanswered questions in the minds of investors.

Smartphones Q3 2018

Amazon loosens tight grip on smart speaker market

New estimates from Strategy Analytics have Amazon maintaining its lead in the smart speaker market, but it’s starting to erode as more mainstream brands hit the market.

Being first to market has its advantages, but these leads are rarely maintained. Getting a jump on the early adopters of course offers a massive advantage, but more often than not the money is made in mainstream market penetration. Unfortunately for those who attempt to use the first-to-market strategy as a means to break the status quo, Joe and Jane Bloggs on the street usually revert to brands they are comfortable with.

“Amazon and Google accounted for a 69% share of global smart speaker shipments in Q2 2018 down from over 90% in Q2 2017,” said David Watkins of Strategy Analytics. “The drop is not only a reflection of growing competition in the smart speaker market but also Amazon and Google’s inability to break into the fast growing Chinese market that is dominated by local powerhouse brands such as Alibaba, JD.com and Baidu.”

Looking at the estimates, Strategy Analytics believes Amazon’s global smart speaker share of shipments fell to 41% in Q2 2018 from 44% in Q1 and 76% in Q2 2017. Google has increased its share to 28% in Q2 2018, up from 16% during the same period last year, while technology giants Apple and Samsung are intensifying competition, as are more traditional audio brands such as Sonos and Bose.

Amazon and Google are still the dominant players as it stands, though companies like Apple and Samsung, both of whom made their names in the hardware space, will test out brand loyalty with their own products. That said, consumers in the mainstream market, the majority who have more basic understanding of the technology industry, will like lean towards brands such as Sonos and Bose. These are common names in the audio market already and brands people have been buying for years; reputation and credibility means a lot for consumer purchases.

With the two market disruptors starting to flag out front, we suspect market share will gradually become more even, with Amazon and Google eventually falling back further. But do they actually care?

We’ve said this before, but these are two companies which do not have an outstanding pedigree in the hardware markets. It has not been a cash-cow for the pair, who have both focused on software and services. We believe this will be the long-term focus of both Amazon and Google.

Launching low-cost devices onto the market and capturing the attention of the highly-vocal tech enthusiasts was an excellent move. It normalised the products and demonstrated to the traditional manufacturers there is money to be made in smart speakers. Now the rest of the industry are playing catch-up, some might suggest it is mission accomplished. The pair can go back to focusing on the aspects which they are more comfortable with.

Both Amazon and Google make cash through the desires of consumers to have more of their lives online. They operate in the virtual world, making money off the ecosystem and creating free services which are attractive to the consumer. In Google’s cash it is the search engine, as well as video platforms and mapping products. For Amazon, it’s the dominant eCommerce platform, and more recently it has been venturing into subscriptions. For both the idea is simple; create an idea which is user friendly, before making money off the connection between consumers and third-parties.

The same business model is possible in the smart speaker world. Whether it is referrals for a takeaway or ordering weekly groceries, Amazon and Google can make money off the digital experience, not simply selling devices to consumers.

The issue to start with that the devices weren’t present in homes around the world, but that hurdle seems to have been conquered. With the products gathering momentum, the mission of normalising day-to-day uses of the virtual assistants can begin. This is where Amazon and Google will make billions in recurring revenues.

Should privacy be treated as a right to protect stringently, or a commodity for users to trade for benefits?

Loading ... Loading ...

Google, Alibaba and Apple erode Amazon’s smart speaker dominance

Research firm Strategy Analytics has published its latest numbers on the global smart speaker market and they reveal rapid growth and diversification.

Amazon, of course, was the first mover in this market with its Alexa-driven speakers sold aggressively through its own dominant retail channel. As you can see from the table below it pretty much owned the smart speaker market a year ago, but the situation is very different today. With Google, Alibaba and Apple among the tech giants to have made their move in that time.

“Amazon and Google accounted for a dominant 70% share of global smart speaker shipments in Q1 2018 although their combined share has fallen from 84% in Q4 2017 and 94% in the year ago quarter,” said David Watkins of SA. “This is partly as a result of strong growth in the Chinese market for smart speakers where both Amazon and Google are currently absent. Alibaba and Xiaomi are leading the way in China and their strength in the domestic market alone is proving enough to propel them into the global top five.”

“Further strong growth in smart speaker sales confirms our view that this new market is far more than just a flash in the pan,” said David Mercer of SA. “Today’s smart speakers are by no means the finished article but they have captured the consumer imagination and we will see rapid evolution in design, functionality and associated use cases over the coming years. We are clearly heading towards to a time in the not too distant future when voice becomes a standard mode of technology interaction alongside established approaches like keyboard, mouse and touchscreen.”

Mercer is spot on about the voice UI, although it could end up being most important in cars and wearables, rather than the living room. It’s also worth juxtaposing this market with smartphones, which amounted to 345 million units in Q1 2018. While the young smart speaker market is growing rapidly, it’s still a faction of the size of smartphones and is unlikely to ever achieve those kinds of volumes because of its relatively limited utility.

Global Smart Speaker Market by Vendor: Q1 2018 (Shipments in Millions of Units)
Vendor Q1 ’18 Shipments Q1 ’18 Market Share Q1 ’17 Shipments Q1 ’17 Market Share Growth Y/Y
Amazon 4.0 43.6% 2.0 81.8% 102%
Google 2.4 26.5% 0.3 12.4% 709%
Alibaba 0.7 7.6% 0.0 0.0% ~
Apple 0.6 6.0% 0.0 0.0% ~
Xiaomi 0.2 2.4% 0.0 0.0% ~
Others 1.3 13.9% 0.1 5.8% 806%
Totals 9.2 100.0% 2.4 100.0% 278%
Source: Strategy Analytics Smart Speaker service

Apple sold 16 million iPhone X in Q1 – far more than any other smartphone model

Research firm Strategy Analytics reckons Apple managed to shift 16 million units of its flagship smartphone last quarter, defying pessimistic reports.

At the start of this week we reported on a rumour that Apple had significantly cut order for the X with its manufacturers because it was struggling to shift what it already had. That rumour turned out to be pretty much rubbish when Apple announced solid numbers a couple of days later and SA’s estimate serve to reinforce that impression.

“We estimate the Apple iPhone X shipped 16.0 million units and captured 5 percent market share worldwide in Q1 2018,” said Juha Winter of SA. “For the second quarter running, the iPhone X remains the world’s most popular smartphone model overall, due to a blend of good design, sophisticated camera, extensive apps, and widespread retail presence for the device.

“Apple has now shifted almost 50 million iPhone X units worldwide since commercial launch in November 2017. The Apple iPhone 8 and iPhone 8 Plus shipped 12.5 and 8.3 million units, respectively, for second and third place. The previous-generation iPhone 7 shipped a respectable 5.6 million units for fourth place. Combined together, Apple today accounts for four of the world’s six most popular smartphone models.”

You might expect the rest of the list to be occupied by the Samsung but you would be sorely mistaken. The fifth best-selling smartphone model globally was the Xiaomi Redmi 5A, which is not a bad effort considering that’s mainly direct (as opposed to operator-subsidised) sales. Let’s see if Xiaomi’s strategic alliance with Hutchison helps it climb the table further. Then, finally, comes the Samsung Galaxy S9 Plus which, to be fair, hasn’t been shipping for long.

Linda Sui, Director at Strategy Analytics, added, “Xiaomi has become wildly popular across India and China,” Said SA’s Linda Sui. “Xiaomi is selling a huge volume of smartphones through online channels, with key retail partners including Flipkart and JD.”

“Samsung’s new flagships, Galaxy S9 and S9 Plus, only started shipping toward the end of the first quarter, but shipments are already off to a very good start,” said SA’s Woody Oh. “We expect the S9 Plus to become the best-selling Android smartphone globally in the second quarter of 2018.”

Global Smartphone Shipments by Model (Millions of Units) Q1 ’17 Q1 ’18
1.  Apple iPhone X 0.0 16.0
2.  Apple iPhone 8 0.0 12.5
3.  Apple iPhone 8 Plus 0.0 8.3
4.  Apple iPhone 7 21.5 5.6
5.  Xiaomi Redmi 5A 0.0 5.4
6.  Samsung Galaxy S9 Plus 0.0 5.3
Rest of Total Market 332.3 292.3
Total 353.8 345.4
Global Smartphone Marketshare by Model (% of Total) Q1 ’17 Q1 ’18
1.  Apple iPhone X 0.0% 4.6%
2.  Apple iPhone 8 0.0% 3.6%
3.  Apple iPhone 8 Plus 0.0% 2.4%
4.  Apple iPhone 7 6.1% 1.6%
5.  Xiaomi Redmi 5A 0.0% 1.6%
6.  Samsung Galaxy S9 Plus 0.0% 1.5%
Rest of Total Market 93.9% 84.6%
Total 100.0% 100.0%
Total Growth YoY (%) 6.2% -2.4%
Source: Strategy Analytics

 

SA is having a busy week, having published its Q1 2018 tablet shipment numbers too. Apple is doing nicely in that area too, shifting almost twice as many units as second-placed Samsung in a declining market.

“Leading vendors are bouncing back with new hardware and value-added features such as improved stylus capabilities, AR, and digital assistants to support new use cases and double down on their appeal consumer and enterprise markets,” said SA’s Chirag Upadhyay. “Our interactions with computing devices are rapidly changing and companies like Apple, Amazon, and Huawei are staying ahead of the curve with targeted product improvements.”

SA tablets Q1 2018

Smartphone market Q1 2018: Apple is doing just fine

Amid rumours that sales of its flagship smartphone have disappointed, Apple posted yet another set of impressive numbers.

The past few weeks saw a bunch of stories all claiming to have insight into the Apple supply chain, suggesting that the flagship iPhone X hasn’t been selling in anything near the volumes Apple was hoping for. Apparently it’s too expensive and the screen is too fragile.

Well Apple’s Q1 2018 numbers pretty much contradict those rumours, with Apple shifting 52.2 million iPhones in the quarter, a 3% increase on the year-ago quarter. Apple doesn’t publish splits by model, but iPhone revenues were up were up 14% annually, indicating an increased average selling price, which seems likely to be due to the X.

“Apple iPhone shipments have grown year-on-year in three of the past 4 quarters,” said Neil Mawston of Strategy Analytics, from whom we derive much of the data in our smartphone shipment table. Apple’s ultra-premium iPhone X is proving relatively popular in some markets like China and the US, while there remains scope for additional expansion in emerging regions such as India and Africa.”

The other story of the quarter is the continued overall decline of the global smartphone market, with shipments falling by 2%, having fallen a fair bit in the previous quarter too. A lot of the reason for this will be China, which everyone seems to agree is in relatively steep decline, but it looks like replacement cycles are lengthening in developed markets too.

Q1 2018 smartphone table


What do you think?

Would a Huawei ban on US technology impact your decision to buy a Huawei Smartphone or wearable device?

Loading ... Loading ...

Sony beats out Apple, Huawei and Samsung for battery performance

Research firm Strategy Analytics has completed a study which points towards Sony’s Xperia XZ2 as the best on the market for battery performance.

This is certainly a good footnote to acquire for Sony, though it should be worth noting the research was commissioned by the Japanese multinational. The objective of the research was to identify how long a devices battery would last when subjected to what would be considered normal usage across the day.

And the results are quite surprising.

Battery life table

What is slightly worrying is the amount of time before battery exhaustion. Your correspondent can’t remember ever getting these sorts of times before charges (unless you count the trusty Nokia 3310) which makes us wonder what is considered normal usage. This has certainly been exceeded at Telecoms.com.

The test was designed to measure the amount of time before the battery was fully drained. A ‘typical user scenario’ was identified and applied to each of the devices. The conditions included using the device for a period of approximately 16 hours over a 24 hour period, with various activities including calling, texting, web browsing, social media, games, camera, music and video. The batteries were also subject to the drain of common activities from the operating system and alerts, with display brightness on each device was set to 150 Nits and sound volumes set to maximum. Default settings were used for everything else. Each device was tested twice before the average time was calculated.

Interestingly enough, Sony hit the top of the tables while Apple and Huawei lagged a little bit behind. Unfortunately for many, the world’s most popular smartphone brand compared pretty woefully to first place. 26 hours is still a considerable amount of time, but losing out so badly to rivals will certainly worry Samsung executives.

In a world where smartphone launches are becoming very repetitive, battery performance is fast becoming a USP for the manufacturers. There is very little change year-on-year to these devices aside from incremental steps on specs, and battery life is one which has featured on and off. Unfortunately for the manufacturers there are few breakthroughs to shout about in this space.

Battery performance has been increasing gradually, but the processing capabilities and applications on new devices are far exceeding these steps forward. The development of the battery has been lagging behind the development of every other area and this problem will only be compounded as the digital economy becomes more prominent.

While this is certainly interesting information to know, we would be curious to hear if anyone has managed to get through the entire day without having to put their device on charge.

Q3 2017 global smartphone shipments – Xiaomi’s resurgence continues

Chinese smartphone vendor Xiaomi’s rollercoaster ride took another positive turn in Q3 2017 with shipments increasing by 73% year-on-year.

The overall market is looking surprisingly buoyant, thanks mainly to the Jio-inspired rush to smartphones in the massive Indian market, which currently has much lower smartphone penetration than China and developed markets. Strategy Analytics reckons the global smartphone market grew by 5% to 393 million units shipped in the quarter.

Among the vendors the biggest beneficiary of this growth seems once more to have been Xiaomi, which experienced is second quarter running of rampant growth. The big Chinese vendors – Huawei, Oppo and Vivo all experienced double-digit growth, Samsung seems to have recovered its mojo after the trials of the past year or so and Apple put in a solid performance, considering loads of people are probably waiting to get hold of the iPhone X. The big loser seems to be the long-tail as the global smartphone market increasingly consolidates itself around the top six vendors.

The global smartphone market has settled into a steady rhythm of single-digit growth this year, driven by first-time buyers across emerging markets of Asia and upgrades to flagship Android models in developed regions such as Western Europe,” said Linda Sui of SA.

“Xiaomi soared 91 percent annually, taking fifth place with 27.7 million shipments for a record 7 percent global smartphone marketshare in Q3 2017, up from 4 percent a year ago. Xiaomi’s range of Android models, such as the Redmi Note 4, is proving wildly popular in India, snatching volumes from competitors such as Lenovo and Reliance Jio. Xiaomi is outgrowing almost everyone, and if current momentum continues, Xiaomi could catch or overtake Oppo, Huawei and Apple to become the world’s second largest smartphone vendor in 2018.”

“Samsung shipped 83.4 million smartphones worldwide in Q3 2017, rising an impressive 11 percent annually from 75.3 million in Q3 2016,” said SA’s Neil Mawston. “This was Samsung’s fastest growth rate for almost 4 years. Samsung’s growth is being driven by strong demand for its A, J and S series models across Latin America, India and elsewhere. Apple grew a below-average 3 percent annually and shipped 46.7 million smartphones for 12 percent marketshare worldwide in Q3 2017, holding steady from the same level a year ago. Despite a delayed launch of the flagship iPhone X model, the new iPhone 8 portfolio was relatively well received in major countries such as Germany and China.”

One of the reasons the vendor picture is so fluid is that a lot of the volume seems to be coming from mid and lower-tier Android devices in developing markets like India. There you still have so much latent demand for smartphones that if a vendor is in the right place at the right time it can shift as many devices as Foxconn can churn out.

Q3 2017 global smartphone shipments

Apple on the rebound in China according to Canalys

Analyst firm Canalys reckons Apple’s smartphone fortunes in China are improving after six consecutive quarters of decline.

Chinese iPhone shipments apparently increased by 40% year-on-year, hitting 11 million in Q3 2017, although it should be noted that Apple has yet to formally announce its shipment and revenue numbers for the quarter. Canalys warns, however, that this upturn in Apple’s Chinese fortunes could be fleeting.

“Apple’s growth this quarter is only temporary,” said Mo Jia of Canalys. “The high sell-in caters to the pent-up demand of iPhone upgraders in the absence of the iPhone X. Price cuts on earlier models after announcing the iPhone 8 have also helped. However, Apple is unlikely to sustain this growth in Q4.

“While the iPhone X launches this week, its pricing structure and supply are inhibiting. The iPhone X will enjoy a healthy grey market status, but its popularity is unlikely to help Apple in the short term.”

The Canalys Apple China numbers are below, followed by the year-on-year comparison for the top five Chinese smartphone vendors. As you can see the company reckons overall shipments declined by 5% in the country, but at the same time four of the top five vendors experienced substantial increases.

Canalys Apple China

Canalys Q3 China

Here’s what Canalys had to say on the matter: “Huawei grew shipments by 23%, shipping over 22 million units to take the lead, while Oppo declined slightly (compared to the stellar performance a year ago) shipping 21 million units. Vivo, with a 26% growth was the most impressive performer in the top 3, shipping over 20 million units. Xiaomi and Apple round up the top 5 this quarter.”

Xiaomi looks like it shipped around 16 million for the quarter, taking the total for the top five to 91 million – 76% of the total. Canalys says total shipments fell by around 6 million, but the top five increased theirs by around 14 million, meaning the long tail must have dropped a whopping 20 million shipments annually – around half its likely previous total.

To sanity-check these numbers we asked Neil Mawston at Strategy Analytics for a second opinion. He hasn’t come up with his Q3 numbers yet – quite sensible since the vendors haven’t either – but he did say this: “We provisionally model China at 0% YoY growth (zero) for 121 million smartphone shipments in Q3 2017.” So opinion is divided, but that long-tail drop-off still seems odd.

Canalys thought it might as well have a crack at India while it was at it, which seems to be the engine room of global smartphone growth these days, following the sudden decline of the Chinese long tail. There we’re seeing healthy growth of 23%, driven largely by Chinese vendors, although Samsung is clinging onto top spot.

“Xiaomi’s growth is a clear example of how a successful online brand can effectively enter the offline market while maintaining low overheads,” said Rushabh Doshi of Canalys. “But Xiaomi focuses on the low end. It struggles in the mid-range (devices priced between INR15,000 and INR20,000 [US$230 and US$310]), where Samsung, Oppo and Vivo are particularly strong. Nevertheless, we predict Xiaomi’s continued go-to-market innovations will allow it to overtake Samsung within a couple of quarters.”

Canalys Q3 India

There seems to be more consensus on India than there was on China, with analyst firm Counterpoint publishing a pretty equivalent set of numbers, although they’re also still keeping an eye on its featurephone market. Both firms also agreed that India overtook the US to become the second biggest smartphone market in Q3.

“India continues to be an attractive destination for handset OEMs,” said Karn Chauhan of Counterpoint. “With strong smartphone growth and a sizeable featurephone market for at least three to four years, OEMs in India can target a diverse set of audiences. This has allowed a number of OEM’s to still realize double digit growth in the featurephone segment in spite of being absent in the smartphone segment.”

Counterpoint Q3 India

Qualcomm dominates smartphone applications processor market

The latest smartphone component data from Strategy Analytics reveals that, despite its legal challenges, Qualcomm remains dominant in the smartphone chip market.

Applications processors are essentially the CPUs of a smartphone and are represented at Qualcomm by the Snapdragon brand. Qualcomm’s main competitor in this area is Chinese chip maker Mediatek, but after a strong year for the latter in 2016, Qualcomm seems to be pulling away again.

“After a successful 2016, Qualcomm continued its momentum and gained market share with the help of a strengthened portfolio across the board from flagship to mid-range,” said Sravan Kundojjala of SA. “After missing the initial 14 nm FinFET AP wave, Qualcomm made sure it is one of the first companies with a commercial 10 nm smartphone AP.

“Qualcomm’s semi-custom 10 nm flagship 64-bit AP Snapdragon 835, which integrates a gigabit-class LTE modem, has seen greater success than its predecessor Snapdragon 820 / 821. Strategy Analytics believes that Qualcomm is poised for further share gains through 2017 with its strengthened Snapdragon 600-series of APs.”

“MediaTek hit a rough patch in 1H 2017, after registering a robust growth in 2016,” said SA’s Stuart Robinson. “MediaTek’s weak portfolio coupled with increased competition from Qualcomm contributed to its share losses in 1H 2017. MediaTek’s flagship Helio X series has not seen much success so far while the mid-range Helio P series of chips performed strongly.

“Understandably, MediaTek is set to de-emphasis Helio X in favor of Helio P to optimize its investment and to recover market share in 2H 2017. Strategy Analytics believes that MediaTek’s recovery will take time as its modem technology is still generations behind market leader Qualcomm.”

Here’s the SA market 1H 2017 applications processor chart. Apple makes its own APs, as many other vendors like Samsung and Huawei often do too, so Qualcomm has done well to keep such a lead. The legal disputes faced by Qualcomm are largely focused more on its modems, but the AP side of things could still be adversely affected if thing go against it.

SA AP chart